ITO, New Delhi V. M/s. Penthea Builders & Developers Pvt. Ltd., New Delhi

ITA 2124/DEL/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7098 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 08-08-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 09-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: F R MEENA
• Keywords: Question of law
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER I.T.A. NO.2124/DEL/2014 A.Y. : 2007-08 INCOME TAX OFFICER, WARD 14(2), ROOM NO. 209, 2 ND FLOOR, CR BUILDING, I.P. ESTATE, NEW DELHI VS. M/S PENTEHA BUILDERS & DEVELOPERS PRIVATE LIMITED, I-E, NAAZ CINEMA COMPLEX, JHANDEWALAN EXTN., NEW DELHI (PAN:AAECP3346D) (APPELLANT) (RESPONDENT) DEPARTMENT BY : SH. FR MEENA, SR. DR ASSESSEE BY : SH. R.S. SINGHVI, CA DATE OF HEARING : 08-08-2016 DATE OF ORDER : 05-09-2016 ORDER PER H.S. SIDHU, JM REVENUE HAS FILED THE APPEAL AGAINST THE ORDER DA TED 21.1.2014 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-XVI I, NEW DELHI PERTAINING TO ASSESSMENT YEAR 2007-08 ON THE FOLLOW ING GROUND:- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN DELETING THE PENALTY U/S. 2 71(1)(C) ITA NO.2124/DEL/2014 2 AMOUNTING RS. 31,43,826/- IMPOSED BY THE AO HOLDING THAT THERE IS NO FURNISHING OF INACCURATE PARTICULARS OF INCOME OR DELIBERATE ATTEMPT TO CONCEAL INCOME BY THE ASSESSE E IGNORING THE FACT THAT THE GENUINENESS OF EXPENDITU RE CLAIMED BY THE ASSESEE CANNOT BE ESTABLISHED. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ABOVE SAI D PENALTY IGNORING THE FACT THAT ADDITION MADE BY THE AO WAS CONFIRMED BY THE FIRST APPELLATE AUTHORITY. 3. THE APPELLANT CRAVES TO BE ALLOWED TO ADD ANY FRESH GROUND OF APPEAL AND / OR DELETE OR AMEND ANY OF THE GROUN DS OF APPEAL. 2. THE FACTS NARRATED BY THE REVENUE AUTHORITIES AR E NOT DISPUTED BY BOTH THE PARTIES, THEREFORE, THE SAME ARE NOT REPEATED H ERE FOR THE SAKE OF CONVENIENCE. 3. LD. DR RELIED UPON THE ORDER OF THE AO. 4. ON THE OTHER HAND, LD. A.R. OF THE ASSESSEE RELI ED UPON THE ORDER OF THE LD. CIT(A) AND HAS STATED THAT LD. CIT(A) HAS PASSE D A WELL REASONED ORDER WHICH DOES NOT NEED ANY INTERFERENCE. FURTHER, LD. A.R. OF THE ASSESSEE STATED THAT THE HONBLE HIGH COURT OF DELHI IN REVENUES APPEAL BEING ITA 270/2015 IN ASSESSEES OWN CASE TITLE AS PR. CIT-7 VS. PENTHEA BUILDERS AND DEVELOPERS PVT. LTD. VIDE ORDER DATED 5.11.2015 HAS UPHELD THE ORDER OF THE ITAT AND DISMISSED THE APPEAL FILED BY THE REVENUE ON THE SIMILAR AND IDENTICAL ADDITION. HE FILED THE COPY OF THE SAID HONBLE HIGH COURT OF DELHI ORDER DATED 5.11.2015. ITA NO.2124/DEL/2014 3 5. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS AND PERUSED THE RECORDS. WE FIND THAT LD. CIT(A) HAS ELABORATELY ADJUDICAT ED THE ISSUE VIDE PARA NO. 6.4 TO 6.14 VIDE HIS ORDER DATED 21.1.2014. THE RELEVAN T PARAS NO. 6.4 TO 6.14 ARE REPRODUCED AS UNDER:- 6.4. IN APPELLATE PROCEEDINGS, THE APPELLANT STATE D THAT THE APPELLANT HAS ACTUALLY PURCHASED LAND DURING THE YE AR AND MADE PAYMENTS TO THE CONSOLIDATOR M/S VIKRAM ELECTRIC EQ UIPMENT (P) LTD. THE GENUINE NATURE OF THE PAYMENT IS NOT IN DO UBT. THE DEBATABLE ISSUE IS WHETHER DISALLOWANCE ULS 40(A)(I A) COULD BE MADE FOR NOT DEDUCTING TAX U/S 194H/194C. THE APPEL LANT HAS ENCLOSED COPIES OF THE DECISIONS OF THE HON'BLE ITA T IN ITS GROUP CASES WHEREIN IT WAS HELD THAT PROVISIONS OF 194H O R 194C WERE NOT APPLICABLE . 6.5. THE APPELLANT STATES THAT A BONAFIDE CLAIM OF DEDUCTION HAS BEEN DISALLOWED. THE APPELLANT HAD FURNISHED ALL RE LEVANT FACTS AND DETAILS ON RECORD AND HAD NOT CONCEALED ANY FACTS. THE FACTS AND DETAILS FURNISHED BY THE APPELLANT WERE NOT FOUND T O BE BOGUS OR FALSE BY ANY AUTHORITY. NO INACCURATE PARTICULARS H AD BEEN SUBMITTED BY THE APPELLANT. 6.6. FURTHER, IN NONE OF THE CASES QUOTED WHICH WER E GROUP CONCERNS OF THE APPELLANT, IT WAS HELD BY THE LD. C IT(A) OR THE HON'BLE ITAT THAT THE PAYMENT TO THE CONSOLIDATOR W AS NOT A GENUINE PAYMENT. THE ONLY ISSUE IN ALL THE CASES WA S WHETHER PROVISIONS OF SECTION 40(A)(IA) OF THE ACT WOULD BE APPLICABLE. 6.7. IN THE CASE OF ITO VS. FINIAN ESTATES THE AO H AD DISALLOWED THE AMOUNT PAID BY THE APPELLANT OUT OF PURCHASES A ND REDUCED IT ITA NO.2124/DEL/2014 4 FROM THE CLOSING STOCK. THE AMOUNT HAD BEEN PAID TO M/S VIKRAM ELECTRIC EQUIPMENT (P) LTD. M/S VIKRAM ELECTRIC EQU IPMENT (P) LTD. WAS A CONSOLIDATOR TO ACQUIRE AND CONSOLIDATE LAND HOLDINGS. THE HON'BLE ITAT STATED THE AMOUNT WAS DULY REFLEC TED IN THE PURCHASES AND CLOSING STOCK. FURTHER THAT PROVISIO NS OF SECTION 40(A)(IA) WOULD NOT BE APPLY AS NO DEDUCTION WAS CL AIMED IN THE P&L A/C. 6.8. IN THE CASE OF ZANOBI BUILDERS &. CONSTRUCTION S (P) LTD. VS. ITO, PAYMENTS WERE MADE TO MIS VIKRAM ELECTRIC EQUI PMENT (P) LTD. THE HON'BLE ITAT STATED THAT NO DISALLOWANCE U LS 40(A)(IA) WAS CALLED FOR, FOR NOT DEDUCTING TDS ULS 194 OR 19 4H. 6.9. THE INTENTION TO QUOTE THESE CASES. AT THIS JU NCTURE IS TO SHOW THAT M/S VIKRAM ELECTRIC EQUIPMENT (P) LTD. IS AN E XISTING ENTITY AND WORKS AS A CONSOLIDATOR. IN NO CASE THE GENUINE NESS OF THE TRANSACTIONS WITH MIS VIKRAM ELECTRIC EQUIPMENT (P) LTD. HAS BEEN DOUBTED. IN ALL RELATED CONCERNS MIS VIKRAM ELECTRI C EQUIPMENT (P) LTD. IS THE CONSOLIDATOR TO WHOM PAYMENTS WERE MADE ON A REGULAR BASIS AND THE PAYMENTS HAVE NEVER BEEN CONS IDERED AS NON GENUINE EXPENDITURE. IN VIEW THEREOF, THE FINDINGS OF THE HON' BLE ITAT ESTABLISH THAT M/S VIKRAM ELECTRIC EQUIPMENT ( P) LTD. IS A GENUINE EXISTING ENTITY. FURTHER, THAT TDS ON PAYME NTS MADE TO MIS VIKRAM ELECTRIC EQUIPMENT (P) LTD. IS NOT REQUI RED TO BE DEDUCTED. 6.10. I SHALL NOW CONSIDER WHETHER PENALTY ULS 271( 1)(C) IS LEVIABLE ON THE ADDITIONS MADE IN THIS YEAR TREATING PAYMEN T TO M/S VIKRAM ELECTRIC EQUIPMENT (P) LTD. AS NON GENUINE AND DISA LLOWING THE PAYMENT MADE FOR NOT DEDUCTING TDS. ITA NO.2124/DEL/2014 5 6.11. IN THE MATTER OF PENALTY, IT IS SEEN THAT THE APPELLANT HAD FURNISHED ALL PARTICULARS IN RESPECT OF INCOME EARN ED AND EXPENDITURE INCURRED. THE AO HAD ALSO NOT STATED TH AT THE PARTICULARS FURNISHED WERE INACCURATE OR THERE WAS AN ATTEMPT TO FURNISH INACCURATE PARTICULARS. 6.12. THE BONAFIDES OF THE APPELLANT CAN BE SEEN FR OM THE FACT THAT ALL DETAILS WERE FURNISHED. THE ACTION OF THE APPEL LANT IS NOT DELIBERATE OR FOR CONCEALMENT OF INCOME. THERE WAS NO CONCEALMENT OF MATERIAL FACTS. THERE WAS NO INTENTI ON OF THE APPELLANT TO CONCEAL INCOME AND EVADE TAX AND MISLE AD THE REVENUE. 6.13. THE HON'BLE SUPREME COURT OF INDIA IN K. P. M ADHUSUDAN VS. CIT (2011) 118 TAXMAN 324 (SC) HELD THAT IN THE CIR CUMSTANCES STATED IN THE EXPLANATION, IF THE APPELLANT'S FAILU RE TO RETURN HIS CORRECT INCOME WAS NOT DUE TO FRAUD OR NEGLECT, HE SHALL BE NOT DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INC OME OR FURNISHED INACCURATE PARTICULARS THEREOF AND CONSEQ UENTLY BE LIABLE TO BE PENALTY PROVIDED BY THAT SECTION. IN VIEW OF THE ABOVE, THE ONUS IS ON THE APPELLANT TO PROVE THAT THERE WAS NO FRAUD OR NEGLECT IN FILING CORRECT INCOME, WHICH THE APPELLANT HAS P ROVED. 6.14. THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS (P) LTD. OBSERVED THAT MAKING AN INCO RRECT CLAIM IN LAW CANNOT TANTAMOUNT TO FURNISHING INACCURATE PART ICULARS. THE APPELLANT HAD GIVEN AN EXPLANATION, WHICH IS BONAFI DE. THERE IS NO FURNISHING OF INACCURATE PARTICULARS OF INCOME OR D ELIBERATE ATTEMPT TO CONCEAL INCOME. THE PENALTY OF RS.31,48, 826/- IS ITA NO.2124/DEL/2014 6 THEREFORE DELETED. THE GROUNDS OF APPEAL ARE RULED IN FAVOUR OF THE APPELLANT. 5.1 EVEN OTHERWISE, WE NOTE THAT HONBLE HIGH COUR T OF DELHI IN REVENUES APPEAL BEING ITA 270/2015 IN ASSESSEES OWN CASE T ITLE AS PR. CIT-7 VS. PENTHEA BUILDERS AND DEVELOPERS PVT. LTD. VIDE ORD ER DATED 5.11.2015 HAS UPHELD THE ORDER OF THE ITAT AND DISMISSED THE APPE AL FILED BY THE REVENUE WHILE DEALING THE SIMILAR AND IDENTICAL ADDITION. THE RELEVANT PORTION IS REPRODUCED AS UNDER:- 16. HAVING CONSIDERED AT LENGTH THE SUBMISSIONS OF LEARNED COUNSEL FOR THE REVENUE, THE PLEADINGS AND THE DOCU MENTS NOT ONLY IN THE CASE OF PBDPL BUT ALSO IN THE CASE OF FINIAN , THE COURT IS UNALE TO FIND ANY DISTINCTION BETWEEN THE TWO CASES AS FAR AS THE CLAUSES IN THE MOU BETWEEN THE PARTIES AND VEEPL OR THE PAYMENT MADE THE LATTER PURSUANT THERETO. AGAIN, WI TH THE REVENUE HAVING ACCEPTED THE DECISION OF THE ITAT IN THE CAS E OF FINIAN, AND WITH THE REVENUE BEING UNABLE TO BRING OUT ANY DIST INGUISHING FEATURE AS FAR AS THE CASE OF PBDPL, THE COURT SEES NO REASON WHY IT SHOULD INTERFERE WITH THE IMPUGNED ORDER OF THE ITAT. 17. CONSEQUENTLY, NO SUBSTANTIAL QUESTION OF LAW AR ISES IN EITHER APPEAL. THE APPEALS ARE DISMISSED. 5.2 KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT LD. CIT(A) BY RELYING UPON THE HONBLE SUPREME COU RT OF INDIA DECISION IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS (P) LTD. HAS OBSERVED THAT THE ASSESSEE HAD GIVEN AN EXPLANATION, WHICH IS BONAFI DE. THERE IS NO FURNISHING OF ITA NO.2124/DEL/2014 7 INACCURATE PARTICULARS OF INCOME OR DELIBERATE ATT EMPT TO CONCEAL INCOME, HENCE, HE RIGHTLY DELETED THE PENALTY IN DISPUTE. EVEN OT HERWISE, WE NOTE THAT ON SIMILAR ADDITION, THE HONBLE HIGH COURT OF DELHI IN REVENUES APPEAL BEING ITA 270/2015 IN ASSESSEES OWN CASE TITLE AS PR. C IT-7 VS. PENTHEA BUILDERS AND DEVELOPERS PVT. LTD. VIDE ORDER DATED 5.11.201 5 HAS UPHELD THE ORDER OF THE ITAT AND DISMISSED THE APPEAL FILED BY THE REVENUE WHILE DEALING THE SIMILAR AND IDENTICAL ADDITION, HENCE, THE PENALTY IN DI SPUTE WILL NOT SURVIVE. IN VIEW OF THE ABOVE, WE UPHOLD THE ORDER OF THE LD. CIT(A) AND DISMISS THE APPEAL FILED BY THE REVENUE. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 05/09/2016. SD/- SD/- [O.P. KANT] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 05/09/2016 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY OR DER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES